Copper explorers see rising tide as prices threaten to breakout

Copper explorers who kept the faith through the cycles can smell the long-promised boom for the industrial metal on the horizon.

The start of the Trump presidency brought fears his anti-free trade policies could tank copper, cruelling demand for the metal famously linked to economic growth.

But the battle for the future facing metal has instead ratcheted up purchases as investors’ fears of tariffs on copper metal exports to the US grow.

Traders hoping to get copper to the US caused an extraordinary spike in Comex futures last week, pushing prices as high as US$4.80/lb.

They’ve since come down to US$4.60/lb, but players in the copper market say it’s more than just US tariff fears sending copper demand higher, as refiners in Asia also look to lock in concentrate supply to fuel a growing green energy sector.

“I was even scratching my head because I didn’t think that tariffs were particularly good for a commodity such as copper,” Christian Easterday, the MD of Chilean copper explorer Hot Chili (ASX:HCH), said

“It’s actually done the opposite of what many were hoping it wouldn’t do.

“What we’re hearing on the ground in China is there’s a lot of Chinese buying on the physical concentrate market and just like last year where we saw a short squeeze on concentrate that drove Comex prices and we had that brief period where copper ran to $5.20/lb.

“It appears that our friends in China, and probably even globally, that there is another big push on trying to secure copper concentrates.”

With the looming trade war on the horizon, Easterday believes copper is showing signs it could one day surpass iron ore as the world’s most valuable metals market.

Major positioning

It has a long way to go yet, but majors are certainly positioning for a world that moves in that direction.

BHP (ASX:BHP) thinks copper demand will rise from 32Mt to 50Mt by 2050 and on Tuesday revealed its copper earnings in the first half had lifted from 25% in H1 FY2024 to 39% in H1 FY2025. Iron ore still dominates at 56%, but the red metal is catching.

That’s informed its recent corporate moves – paying $9.6bn for OZ Minerals to consolidate the South Australian copper province, an attempted takeover of Anglo American last year, US$15bn plan to maintain production at its mines in Chile into the 2030s and the US$3bn deal to acquire half of the remote Josemaria and Filo Del Sol operations alongside Lundin Gold in a remote high-up part of the Argentina Andes known as Vicuna.

It emerged early this year that its biggest rival Rio Tinto (ASX:RIO) had also held talks with Glencore about a combination of the two businesses last year, which could have created the world’s top copper producer among other things.

“There’s one audience, that’s the market, and then there’s another audience, and it’s the positioning amongst the largest mining companies in the world,” Easterday said.

“They’re all positioning for copper and where this metal market is going, and so Rio Tinto to BHP to Glencore, to our friends at Freeport, Antofagasta, they’re all pushing out into new developments now.

“We said last year it would start trickling into the new developers after the game of musical chairs between existing production starts to die down and things start to become difficult to acquire.”

Hot Chili holds one of the few large scale pre-development assets that could plug yawning gaps in the future supply chain. Its low altitude Costa Fuego project, which includes the Productora and Cortadera porphyries, could produce 95,000tpa of copper and 49,000ozpa of gold for its first 14 years.

But HCH is studying plans to lift that to 150,000tpa over more than two decades. While its previous discoveries have come at less opportune times in the cycle, a new find called La Verde caught investor interest last week hot on the heels of a shallow find by AusQuest (ASX:AQD) in Peru, which sent the latter 330% higher year to date.

“So we have a lot of things to be excited about with La Verde,” Easterday said.

“It’s delivering better results than we got in the first round of drilling at Cortadera, but more importantly, it’s delivering results when we’ve got $19 million in cash in the bank, and we’ve got a copper price that is trying to push to US$5/lb for the third time now. It’s a very, very different world.”

Analysts watch copper space

While a surge in gold prices and equities has taken the ASX by storm, analysts say investors should maintain a close watch over the copper space, where ASX opportunities are few and far between.

“There’s no doubt that the energy transition is going to be heavily underpinned by copper,” Canaccord Genuity senior mining analyst Paul Howard told Stockhead at the RIU Explorers Conference in Fremantle.

“We banged the table about batteries and lithium demand into these things, but we’ve got to remember in solar, in wind, in data centre, in vehicles, all the wiring is copper.

“The copper wiring is the glue that holds all of this electrification together. So without that raw material we’d struggle with that energy transition.”

While Trump’s ascendance to the White House has put a few question marks on the direction and shape of that energy transition, the work being done to expand copper refining capacity in Asia shows how big the gap between supply and demand could become. And it’s not just a China equation.

“Things like Adani building this refinery in India, so it’s a 500,000 tonnes per annum smelter really that’s bringing in concentrate, and then he’s going to double capacity to 1Mtpa by like 2029, and that second half isn’t actually committed – there’s no copper to go into that second half expansion.

“So I think the dynamic there is there’s the demand for it, but where’s all of this going to come from?”

That’s bullish for ASX explorers who have previously seen large capital hurdles and mild prices as a stumbling block to entering production.

“You’ve got someone like Caravel Minerals (ASX:CVV) here in WA who’s got a very big porphyry, it’s low grade,” Howard said.

“The TSX seems to value seemingly low grade porphyries because they make a lot of money, because the mining costs are low. So I think Caravel could benefit from eyes on copper porphyries on the ASX.

“We’ve seen AQD in Peru, they’ve made what looks like it’s going to be a discovery and getting a lot of attention on the ASX again.

“Hot Chili could benefit from this, I think they’ve been around for quite a while, but just probably haven’t felt the love on the ASX and maybe gets a bit more attention in North America.”

High grade hopefuls

While large, low grade deposits are more likely to solve the supply problem, they will come with longer development lead times and capex bills.

Smaller, high grade explorers are hoping to enter production quicker, leveraging the benefits of higher prices before the hypothetical new wave of supply from the majors comes online.

The poster child has been FireFly Metals (ASX:FFM), which owns the 1Mt+ Ming deposit at the Green Bay project in Newfoundland, Canada.

Nearby junior Firetail Resources (ASX:FTL) is looking for something similar elsewhere on the island at the Skyline prospect, one of two major opportunities along with Picha in Peru, where BHP is now helping look for a discovery commensurate with its investment hurdles via its BHP Xplor incubator project.

Firetail MD Glenn Poole says high grade discoveries will be major assets in the coming copper cycle. Skyline produced ~100,000t at between 3-12% copper, 7% zinc and 1-3oz/t silver at the turn of the 20th century, but has gone little explored since it was held by Noranda in the 1990s.

“Skyline is one of those high grade deposits that is lacking in the industry at the moment, these high grade assets that can deliver a lot of metal very quickly to the market,” he said.

Elsewhere, in Arizona, New World Resources (ASX:NWC) is aiming to make an FID in 2026 and enter production by 2027 from its Antler mine.

The project would produce 30,000tpa of copper equivalent metal over 12 years from a mining inventory of 13.6Mt at 3% CuEq. Including by-product credits, costs at the site will come to US$0.12/lb, well into the bottom quartile globally.

While development in the United States has often been complex, he said the push to revive domestic energy and metals production since Trump’s inauguration had been noticeable.

“On day one in office, President Trump signed an executive order outlining the plan to restore America’s mineral dominance and declaring a mining and metals emergency in the US,” MD Nick Woolrych told delegates at RIU on Wednesday.

“We are already seeing the benefits of this with our interactions with the federal government and also our US based investors.

“The smart resources investment money focused on building copper and other critical minerals projects is starting to flow into Arizona, and government support at all levels is unprecedented.”

At Stockhead, we tell it like it is. New World Resources, Hot Chili and Firetail Resources are Stockhead advertisers, they did not sponsor this article.